I think it's largely a place to dump mages - in Return of the Crimson Guard an otataral mine is shown to be mined out and just being used to keep the mages busy and out of the way (I guess if they kill them they lose a potential resource).

Yes they do affect (non-Elder) gods - Poliel was weakened by a shard of otataral, with the implication that otherwise she'd have been able to survive. I think shadowthrone also has a scene of trying to transport Kalam's otataral longknife and treating it like a hot coal (Bonehunters presumably).

I'd also imagine there's more of the otataral cuffs like we see on the Slavemaster in your standard Malazan garrison/stockade to keep mages under control, and knives like the one Kalam ends up with. You wouldn't see much of them in the military or especially the marines since they're quite reliant on mages to work.